The oligarchy has had its greedy eyes on the Social Security trust fund for a long time, seeking to divert all those funds to Wall Street to goose up the stock market and enrich themselves with it. The problem is that people are rightly suspicious of efforts to tamper with their one secure source of retirement funds.

Since the Republicans have traditionally been seen as the servants of the oligarchy, people have quickly reacted when they make any moves to undermine Social Security, as George W. Bush painfully discovered in his second term. The oligarchy knows that they have a better chance when Democrats are in power, which is why we need to be especially vigilant and oppose the current moves by the Obama administration. The reduction in payroll tax contributions by employees that was part of Obama’s budget deal at the end of 2010 was for me a sign that he was seeking to undermine Social Security by reducing its revenue stream, thus artificially creating a crisis where none should exist.

His latest proposal to give employers a similar reduction in their contribution to payroll taxes, thus further exacerbating the problem, is confirmation of the fact that he wants to set in motion the wheels to privatize Social Security.

We need to realize that Obama, although he may make some positive moves on some social issues dear to liberals, is barely distinguishable from the Republicans when it comes to being a servant of the oligarchy.

In this article in the New York Times, one paragraph jumped out at me because it touched a nerve.

“On the one hand the markets want a deal,” said Howard Gleckman, an editor and analyst at the Tax Policy Center, a joint effort of two centrist research organizations, the Urban Institute and the Brookings Institution. “On the other they don’t want a deal that’s going to send the economy back into recession.”

I find it really annoying when people speak so glibly about what ‘the markets’ want and don’t want. How could they possibly know? The stock markets involve millions of people trading billions of shares each day for all manner of reasons. The idea that one can look at the behavior of stock market indices and deduce what is causing it to behave in a particular way is ludicrous except in the case of major events (like the financial collapse) in which case almost anyone can assign cause without being a Wall Street market ‘expert’. And yet these people do it on a daily, or even hourly, basis.

Bob Garfield of the radio show On The Media had a droll piece on this glib single factor analysis. (Note: The audio is wrong and different from the transcript. To hear the seven minutes audio report, click on the link below, and begin at the 24:50 minute mark.)

The way these analysts speak so confidently about something they cannot possibly know reminds me strongly of theologians who also speak confidently about the properties of god and what he wants, even though they have no idea either. The way that politicians try so hard to propitiate ‘the market’ by doing things that will raise the stock indices also reminds me of the way that religious people try to do things to please their inscrutable gods.

I wrote earlier about how European companies now feel free to abuse US workers the way that US companies abuse workers in the less developed world. Now come reports that China has also turned the tables and Chinese companies are abusing European workers, as described in this story about the giant Chinese shipping company Cosco.

Cosco doesn’t allow unions or collective bargaining among its 500-plus Greek workers. The unions report that Cosco workers are largely unskilled and working on a temporary basis, with no benefits. Despite persistent rumors about their labor conditions, until now no Cosco workers have spoken out to the media.

But a former Cosco worker, who had just been sacked, spoke to NPR about work conditions on the Chinese-run pier, on the condition that his name not be used. The worker says he regularly worked eight hours a day with no meal breaks and no toilet breaks.

“I think their actions are breaking the law,” the worker said. “The rights are to have something to eat around 12 o’clock [and] to have our breaks, and not work like a dog straight [through] from morning till afternoon.”

He says workers were told by supervisors to urinate into the sea, rather than taking toilet breaks. Those operating straddle carriers had to take cups up into their cabins to urinate into, and he says they were not given breaks, either, despite the clear dangers of operating at such a height for so long.

The worker says he was paid 600 euros a month — about 50 euros each shift — around half the salary at the neighboring Greek-operated pier, with no extra money for working night shifts or weekends. There was no set schedule; he was kept on 24-hour call for nine months.

The Greek government seems unwilling or unable to protest because it desperately needs Chinese investments. Greece is vulnerable because of its deep economic crisis caused by the same banking interests that caused the debacle in the US.

When you read of the moves to ‘bail out’ Greece by the European Union, keep in mind that what is being advocated is a bail out of the banks, since the bail out money will pass through the Greek government to the banks to make up for their losses.

The bankers rule the world and are driving a race to the bottom for the world’s workers.

Last month I wrote about how the Swedish corporation IKEA became transformed from a model employer in Sweden to an abusive one in the US and that this was because the US does not provide the same level of protections for workers that Sweden does.

Harold Meyerson writes that IKEA is just one example of a trend in which foreign companies see the US as the new home for sweatshops. Deutsche Bank, for example, has been accused of becoming the largest slumlord in Los Angeles, doing things it could never have done in its home country of Germany.
[Read more…]

One of the dangers of the global financial system is that it gives far too much power to a few giants corporations which can choke off access to entities they do not like or which they think threaten oligarchic interests. For example, a few credit card companies now dominate and they can and will use their power to serve the coercive needs of governments. Recall how Visa and MasterCard banned transfer of contributions to WikiLeaks to serve US government interests, even though WikiLeaks has not been accused of any crime.

Enter bitcoins, a new peer-to-peer decentralized digital currency that seeks to bypass this system. Here’s a brief video that explains how it works.

This Wikipedia page explains more about how it works. I can’t say that I fully understand it yet. But it looks promising as a way of undermining financial monopoly power.

The Attorney General of New York state has opened an investigation into the practice of mortgage loan packaging by the big banks and investment firms like Bank of America, Morgan Stanley, and Goldman Sachs. It was these practices that led to the real estate bubble and subsequent collapse.

This is a hopeful sign since we cannot expect the Obama administration’s justice department to take any serious action since the White House has long been a wholly owned subsidiary of Wall Street.

Matt Taibbi, who has been relentless in driving this story forward, is cautiously hopeful that something meaningful might come out of this.

This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era.
…
The reason this is such a potentially deadly investigation for the banks is that they seemed to be so close to getting away scot free. There is another investigation into the banks’ mortgage abuses by the states’ Attorneys General, led by Iowa AG Tom Miller, that was rumored to be headed toward a settlement, despite the fact that nothing like a complete investigation has been done.
…
Such a desire to get some kind of deal done and sweep the mortgage mess under the rug once and for all seems almost universal among high-ranking politicians, and particularly in the Obama administration, which has acted throughout like it wants more than anything to simply get all of this over with and put in the past.

I am going to wait and see how this turns out. The oligarchy is going to close ranks and pull out all the stops to defend itself and preserve its privileges and get away with a plea deal that involves just a slap on the wrist and fine.

In an article in the May 26, 2011 issue Rolling Stone titled The People vs. Goldman Sachs, Matt Taibbi says that in a just world, a new Senate report should trigger a massive Justice Department investigation and criminal charges against the people in charge of the big financial companies, especially Goldman Sachs.

The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history — “a million fraud cases a year” is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin’s small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street’s aristocratic impunity and prosecutorial immunity produced since the crash of 2008.
…
But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences.

Taibbi is, as always, able to make reporting about dry financial matters come alive and it is interesting to see how he does that. I think he succeeds because he couples knowledge of arcane details with not holding back when it comes to conjuring up vivid imagery and metaphors (and even profanity when warranted) to describe what is going on.

For example, to those who try to excuse the evidence of the bankers’ greed as the kind of small missteps that anyone can make, he says:

Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. Goldman isn’t a pudgy housewife who broke her diet with a few Nilla Wafers between meals — it’s an advanced-stage, 1,100-pound medical emergency who hasn’t left his apartment in six years, and is found by paramedics buried up to his eyes in cupcake wrappers and pizza boxes.

On Goldman’s strenuous efforts, once it realized that it was holding huge amounts of worthless assets, to find suckers to sell it off to and what they did after they forced the sale, he writes:

Goldman was like a car dealership that realized it had a whole lot full of cars with faulty brakes. Instead of announcing a recall, it surged ahead with a two-fold plan to make a fortune: first, by dumping the dangerous products on other people, and second, by taking out life insurance against the fools who bought the deadly cars.

In describing the multiple ways that Goldman defrauded its own clients, the very people who were paying for its services, he says:

This is a little like getting an invoice from an interior decorator who, in addition to his fee for services, charges you $170 a roll for brand-name wallpaper he’s actually buying off the back of a truck for $63.

To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it’s betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried.

Taibbi describes the tricks used by Goldman to get the highest AAA ratings for the junk securities on its hands that enabled them to be sold off to their dupes. They did this by taking the low-rated bonds from each pool and then ranking them again within that pool and giving the best the highest rating. And then repeating the process.

This is kind of like taking all the kids who were picked last to play volleyball in every gym class of every public school in the state, throwing them in a new gym, and pretending that the first 10 kids picked are varsity-level players. Then you take all the unpicked kids left over from that process, throw them in a gym with similar kids from all 50 states, and call the first 10 kids picked All-Americans.

Taibbi’s article is well worth reading in full.

Will the Justice Department prosecute? Don’t hold your breath. Starting with Bill Clinton, there has been a continuous bipartisan sellout to Wall Street and I don’t expect anything more from Obama. What I predict will happen is that if the rest of the major media raise a fuss about this report (which itself has a low probability given the media’s alliance with the oligarchy), then the Justice Department might be forced to look as if it is doing something. They will open a highly publicized investigation, then strike a deal with Goldman Sachs to have them pay a fine which will seem like a lot to us (say a few hundred million dollars) but will be peanuts to Goldman which will look on it as just the cost of doing business.

But no one will go to jail and there the matter will end.

The Lewin subcommittee’s hearings figured prominently in the wonderful documentary Inside Job that I reviewed two weeks ago. The producers of that documentary received Academy Awards for it in February and what they said on that occasion pretty much sums up the corrupt nature of US politics.

The attempts to stigmatize the poor continue apace. I wrote earlier about the move to give welfare recipients their allocation via orange debit cards so that everyone would know they were on welfare. Now a Michigan legislator wants to ban foster children from using that state’s $80 per year clothing allowance to buy any new clothing item. Instead the clothing vouchers could only be redeemed at second hand stores.

There is nothing intrinsically bad about buying used clothes or any other item. I would guess that almost all people have done so. It is the idea of forcing poor people to have only that option, that new things are too good for them and they do not deserve them, that makes me find such stories revolting. What kinds of people spend their time thinking up such things? Maybe they will next give poor people permits that allow them to get their food from dumpsters.

One of the enduring puzzles is why so many poor and middle class people are so supportive of policies that benefit only the rich. The often cited reasons are that these people are either stupid or that they have a fantasy that they will be very rich someday and are protecting their future interests.

But via Kevin Drum, I heard about a new study that suggests another reason, which is that people have a highly distorted idea about where they themselves stand in the economic pecking order. The study asked people in Argentina in the ten income deciles to rank themselves as to which decile they thought they were in. “They found that everyone thought they were basically middle class. Poor people consistently overestimated their rank, and rich people consistently underestimated their rank.”

Why is this? “The authors suggest that this misperception may be related to the types of people respondents interact with, and therefore use as a reference point. If you’re mostly exposed to people earning about as much as you, you’re likely to think your earnings are average.”

The solution? Make people better aware of their true position. “In the Argentina study, for example, respondents were eventually informed about whether their own rankings estimates were too high or too low. This news changed people’s policy attitudes. People who thought they were relatively richer than they actually were started to demand higher levels of income redistribution when told they were actually relatively poor.”

These results are consistent with a study done in the US that I wrote about late last year which showed that people here think that wealth is more equitably distributed than it really is.

He discusses his new book Money and Power: How Goldman Sachs Came to Rule the World. The title pretty much says it all.

Part 1 of the interview:

Part 2, where he really dishes the dirt: